Recession and rebound
Covid-19 continues to worry us. Globally people have been trying hard to secure a vaccine so that some hope is generated to tackle the pandemic that has played havoc with our lives and the economy.
International monetary body, the IMF has already signaled an alarm as it predicted a deep global recession this year and the world growth to be -4.4 per cent. In its latest World Economic Outlook report, the International Monetary Fund also said the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.
The IMF continues to project a deep recession in 2020 with the global growth projected to be -4.4 per cent, an upward revision of 0.8 percentage points compared to its June update.
Though employment has partially rebounded after having plummeted during the peak of the crisis, the crisis seems far from being over. However, the employment remains well below pre-pandemic levels and the labour market has become more polarised with low-income workers, youth, and women being the hardest hit.
What is more worrying is that the ascent out of the calamity is going to be long, uneven, and highly uncertain. It is essential that fiscal and monetary policy support that has been announced in various developing countries like India is not prematurely withdrawn.
If that sort of a situation arises then the possible rebound may take even more time to become a reality. Since the world is adapting as a result of eased lockdowns and the rapid deployment of policy support at an unprecedented scale by central banks and governments around the world, things may change for good.
The same can prove to be true in case of India’s economy. Right now things do not seem to be that rosy as the government is trying to portray, but the way the economy is being driven and the needed impetus is being provided to it, the coming months may oer some promises.
The conditions in India, especially by various financial agencies too have been predicted to witness a severe downgrade. These agencies have predicted a contract by a massive 10.3 per cent this year. But India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China’s projected growth rate of 8.2 per cent.
Even the IMF report has claimed revisions to the forecast on India expecting that the economy will witness a surprising rebound in 2021. All this is projected despite the spread of the virus and containment measures having severely disrupted supply and demand conditions in India.